It’s never easy to choose between leasing and buying a new car. But it can be particularly challenging for electric vehicles like Tesla. What you need to know about leasing or purchasing a Tesla is something we’ll be discussing today. This includes where to discover the best EV lease offers and pre-owned Tesla models. So this article covers all about Tesla lease vs buy.
This is due to the fact that there are a number of crucial considerations to make. This includes factors such as the tax credit for EVs, the vehicle’s rate of depreciation, and whether or not you will be able to purchase the car when your lease expires.
A cheap way to drive a high-end car like a Tesla Model S or Y that would otherwise be beyond your price range is to lease it. However, you might find that you get less for your money than you would have if you paid the whole and bought the car.
- Tesla Credit Score Requirements
- Lease A Tesla
- Tesla Leasing Process
- Which Option Is Ideal For You?
- Tax Credits
- Conclusion
- FAQ
Tesla Financing
You’re considering purchasing a Tesla and are curious about the cost of a lease? Have you thought about the Model 3, which is the cheapest model of Tesla? Or maybe you have the resources to treat yourself to the Model S Plaid? What shade? What specs and options? Should you buy rather than rent?
You should think about all of these issues before taking your first joy ride with zero emissions. Fear not, future Tesla owner; the detailed information that follows explains what a new Tesla buying process comprises and what choices you should make before you press the gas pedal.
A loan from a Tesla financier or another lender, with terms ranging from 36 to 72 months, can be used to buy a Tesla. Please be aware that depending on the state, the Tesla loan is accessible to qualified applicants.
You must fill out a credit application in order to lease or borrow money to pay for your car. Sign into your Tesla Account after placing your order to verify your delivery information, finish up your payment details, and start the credit application.
You must choose your lender and complete your credit application with underwriting details such as your social security number, phone number, address, and place of employment if you plan to finance the purchase of a Tesla.
The delivery date will be provided to you once your credit application has been approved. Before taking delivery, you must sign your loan or lease agreement (for more context, check out our guide on how to get out of a car lease) in your Tesla Account if you are financing with a loan. The person who applied for finance must be present when the car is delivered.
Tesla Financing Credit Score Requirements
You must first determine your eligibility for financing if you don’t intend to pay cash for your car. To find out if you qualify for a lease or loan, the easiest method to find out from Tesla is to just apply.
Tesla doesn’t post their minimum credit score requirements for financing. However, even if you are eligible, Tesla Lending doesn’t currently operate in all states. But, you always have the option of third-party financing for a loan or lease.
Additionally, even if you are eligible for Tesla financing, you may still want to compare quotations from other lenders. This can help you make sure you are getting the best interest rate available.
Tesla Financing Rates
According to Tesla a new Model 3 will cost $39,990 in total. To this $1,200 in delivery fees, will be added resulting in a total payment of $41,190 upon signing. Chances are you’ll lease or take out a loan instead unless you’ve been saving up for a Tesla in advance.
Lease A Tesla
Tesla leasing provides qualified consumers with cheap terms and practical monthly payment alternatives. Learn more about how to apply for a lease, how to pay your rent each month, and your choices if your lease expires. You could lease the Tesla Model 3 for 36 months with a $5,584 down payment and a projected $389 monthly loan payment.
Leasing a Model 3 is more economical if all you want to do is keep your monthly costs low. However, it’s important to keep in mind that you’ll be spending $19,500 in total over the course of three years, which is almost half the car’s value.
When you sign the lease, you could also be required to pay state or local sales tax (unless you know how to avoid paying sales tax on a used car). This amount in some places is due upfront and in others is included in your monthly payments. Additionally, you might be required to keep insurance that is more extensive than what you would get if you bought it outright.
Tesla Lease Options
You can choose the most suitable payment method with the Tesla leasing calculator. Please be aware that there may be additional taxes and fees and that Tesla leasing is not accessible in all states. These projected Tesla lease prices are estimates only and are subject to Tesla’s underwriting procedure.
Tesla Leasing Process
View the financing choices that are available to you by choosing “Finance” in the “Payment Method” section of your Tesla Account. Continue to choose “Lease” among the options. Please be aware that in order to submit a credit application, you must be at least 18 years old and possess a social security number.
Choose Tesla as your financier and choose your ideal down payment, desired monthly payment, ideal lease period, and ideal annual miles. To continue with your application, review the pricing information. Your date of birth, registration address, social security number, employment details, and income information are all required to complete your application.
When you submit your credit application, Tesla will review it. You can resubmit your credit application by following the same steps if your information changes or your credit approval expires. The “Payment Method” section of your Tesla Account will inform you of the credit decision.
A Tesla Advisor will contact you with the following steps for taking delivery of your Tesla once you have accepted the financing offer in your Tesla Account and it has been authorized. A member of the Tesla team will get in touch with you to discuss the next steps if your credit application is rejected within one business day of the decision.
At least 24 hours before your delivery appointment, your lease agreement will be accessible for signing in the ‘Payment Method’ section of your Tesla Account. Any necessary documentation must be e-signed in your Tesla Account while leasing a Tesla. You must be present and produce proof of insurance at the time of delivery if you submit a credit application.
Tesla Lease Buyout
Elon Musk is reportedly saving them for an automated taxi fleet, thus Tesla does not currently offer lessees the opportunity to purchase the Model 3 or Model Y at the end of the lease. However, other Tesla vehicles may be eligible for this offer.
Tesla Lease Vs Buy: Which Option Is Ideal For You?
There isn’t a one-size-fits-all solution for leasing or financing a Tesla. Your annual mileage expectations and how frequently you wish to buy a new car must be considered along with other criteria. not to mention overall expenses. Let’s look into the important factors to be considered before making the final decision.
Tesla Lease Vs Buy: Cost Of Owning A Tesla
This is unquestionably the most subjective aspect of the discussion. You will return your keys and responsibilities after your lease expires. You will own your Tesla outright once you pay off your last loan payment. It will be legally and unconditionally yours.
Those who favor the first scenario contend that owning any car is expensive because they are depreciating assets. In other words, they depreciate over time and squander your money. Members of the latter group would emphasize the freedoms and cheaper long-term costs associated with outright car ownership.
According to Tesla, a new Tesla Model 3 will cost $39,990 in total, plus $1,200 in delivery fees. This results in a total amount of $41,190. Chances are you’ll lease or take out a loan instead unless you’ve been saving up for a Tesla in advance.
Tesla estimates that a $4,500 down payment and a 72-month loan period would cost $549 a month at a 2.49% APR. Alternatively, you could lease the car for 36 months with a $5,584 down payment and a projected $389 monthly loan payment.
Leasing a Model 3 is more economical if all you want to do is keep your monthly costs low. However, it’s important to keep in mind that you’ll be spending $19,500 in total over the course of three years, which is almost half the car’s value.
When you sign the lease, you could also be required to pay state or local sales tax. This in some places is due upfront and in others is included in your monthly payments. Additionally, you might be required to keep insurance that is more extensive.
Tesla Lease Vs Buy: Time Period
Similar to other automotive leasing schemes, Tesla provides 24 or 36-month leases. On the other hand, if you use Tesla’s direct lending, your finance options for a Tesla auto loan are 36, 48, 60, and 72 months.
In light of this, it’s crucial to think about how long you want to make payments in addition to how long you want to drive a Tesla. Tesla lease payments often cost less than loan payments, and you’re locked in for a shorter amount of time.
Although monthly payments for a Tesla lease are lower than those for a loan, the long-term cost of purchasing a Tesla may be lower.
Tesla Lease Vs Buy: Depreciation
The rate at which your car loses value over time is known as depreciation. Although certain classic cars can maintain or even increase in value, most cars lose value over time. Similar principles apply to electric cars.
Given their limited ranges and untested lifespan, EVs “tend to degrade in value fast,” according to the World Resources Institute. Some electric cars, like the Nissan LEAF, can lose up to 80% of their value in just five years. This makes it more cost-effective to purchase a used LEAF than a brand-new one.
Other automakers’ EVs, like those made by Ford and Toyota, also lose value at a comparable rate. However, Teslas are an exception. Some Tesla models only lose value by 10% during the first three years of ownership. Also, the battery capacity begins to decrease by 5% only after more than 50,000 miles of driving.
Thankfully, new Teslas perform better than those from other automakers. The average three-year depreciation rate for EVs was 52%, according to one study. So, in the first three years after purchase, a new EV would lose around half of its value.
Teslas, however, fared significantly better in this area. Depreciation is less of an issue for Tesla owners than it is for owners of other premium cars. Because used Teslas sell for almost as much as new ones. The depreciation rates for the Tesla S, X, and 3 were around 36.3%, 33.9%, and 10.2%, respectively, as of writing this.
It’s far simpler to recuperate the expense if you decide to trade in or sell a Tesla (for more insight, check out our guide on how to trade a car that is not paid off). This is because they maintain their battery capacity and resale value so well.
Tesla Lease Vs Buy: Mileage Limit
If you finance a Tesla, you technically don’t own it outright, but you do in terms of practical ownership. When, when, and how you drive it are all up to you. When you lease a Tesla or any other car, that is not the case.
How much you’ll be driving the EV is something else to think about before leasing it. Leased vehicles have an annual mileage cap. If you exceed it or abuse the car too much, you’ll be charged heavily.
Typically, leases limit the number of miles you can drive in a calendar year. Dealerships run the danger of receiving their Teslas back with an abnormally high mileage if they don’t. Additionally, a car’s value generally decreases as it travels further. Although this is a negotiable clause in your lease, it can be limiting if you intend to use your Tesla regularly and extensively.
Up to 10,000 annual miles are included in Tesla’s regular leasing package. They also provide the option to boost that number to 12,000 or 15,000 for a higher monthly cost. That might be more than enough if you only use it every day to get to work. However, if you want to drive your Tesla a lot, you could be better off paying cash for it.
You will be covered if anything goes wrong thanks to an 8-year warranty on the battery pack and a 4-year warranty on the rest of the car. Some Tesla owners claim to have driven their vehicles for hundreds of thousands of miles with minimum maintenance. This makes them a wise long-term investment.
If you intend to drive your Tesla a lot, buying it outright will relieve you of the burden of worrying about annual mileage restrictions.
Tesla Lease Vs Buy: Tax Credits
The Qualified Plug-In Electric Drive Motor Vehicle Credit, as it is officially known, is a federal income tax credit that can be used to lower the cost of a new EV. Taxpayers who qualify may deduct up to $7,500 on their tax returns.
While leasing a car this credit will go to the manufacturer and lessen your monthly lease payments. However, buying a car typically allows you to claim the credit outright. Make sure to account for any potential tax breaks, rebates, or tax credits when analyzing the cost of leasing or financing a Tesla. These are incentives provided by the government for purchasing an electric vehicle.
In most circumstances, if you buy the car outright or get a loan to pay for it, you’ll get a bigger rebate than if you lease it. If you lease, you might not even get an incentive. Whether you purchase a new or used Tesla could also affect the refund amount.
Tesla models have exceeded their production allotment, thus they are no longer eligible for federal tax credits. Nevertheless, based on where you live, you can still be eligible for state incentives. For instance, the California Clean Fuel Reward grants qualified Tesla vehicles a $750 point-of-sale reimbursement.
Remember that not all states provide substantial subsidies for electric automobiles yet. Some may just provide you with a lower cost for charging your Tesla, while others offer no incentives at all. On Tesla’s website, you may find a comprehensive list of rebates, credits, and incentives.
Normally, the tax credit is more advantageous if you purchase rather than lease. But Teslas are temporarily ineligible for it, regardless of whether you buy or lease.
Tesla Lease Vs Buy: Range And Performance
No, it doesn’t add power that your Tesla is leased rather than financed. However, compared to financing, leasing may offer you a slight performance advantage.
The performance of the powertrain and battery range are two areas that electric vehicle manufacturers are always striving to improve. Thus, each new EV model (including those in Tesla’s lineup) may perform significantly better than the one before it. The battery range of the 2012 Model S, for instance, was 265 miles. The most recent model has a typical range of about 400 miles.
In that sense, regularly switching out your Teslas every two to three years could give you a performance advantage. In other words, be prepared to pay more upfront if you want access to the most sophisticated, most potent Teslas. The range and battery life of used Teslas will simply be inferior to those of the most recent versions.
The Tesla Model S Long Range currently has the longest range. It offers over 405 miles of range on a single charge. With a price tag of $79,990, it is also one of the priciest Teslas. It costs roughly twice as much as the Model 3 Standard Range, which has a range of 263 miles.
Additionally, the Model S accelerates super-quick, going from 0 to 60 mph in 3.1 seconds as opposed to 5.3 seconds for the Model 3. Because you can upgrade to a newer model at the end of your lease, leasing can be a terrific way to drive the most recent, top-of-the-line vehicles one after the other.
By leasing a Tesla, you may get the newest models at a great price and make sure that you never have to drive an old car.
Tesla Lease Vs Buy: In Conclusion…
Let’s go over when it might make sense to lease versus financing in case you’re still unsure. The leasing plan should work for you if you like to replace your car every few years. In this manner, you may avoid worrying about your Tesla maintaining its value or having to go through the typically difficult selling process.
If you plan to keep your Tesla for a while, financing becomes the most prudent choice. You’ll only be accountable for regular maintenance, insurance, and taxes once your auto loan is paid off. That would be far lower than the regular lease payments. Additionally, if you decide to sell or trade-in your Tesla for a new car (or want to learn how to trade car that is not paid off), you might recoup some of your expenses.
FAQs
Can You Lease A Tesla
Tesla leasing provides qualified consumers with cheap terms and practical monthly payment alternatives. You can choose the most suitable payment method with the Tesla leasing calculator. Please be aware that there may be additional taxes and fees and that Tesla leasing is not accessible in all states.
How To Buy A Tesla
Tesla offers two methods to purchase its vehicles: online or at one of its physical showrooms. Both times, you’ll probably order a car rather than immediately purchase one.
Are Teslas Worth It
Anyone wishing to purchase a luxury car with a contemporary appearance that is also an electric vehicle frequently chooses Tesla cars. These cars have evolved into somewhat of a status symbol in addition to being more environmentally friendly than your regular gas-powered cars.
Is It Better To Lease Or Finance
Because you only pay for the depreciation of the car during the lease term, along with interest charges (also known as rent charges), taxes, and fees, lease payments are usually always lower than loan payments. Your car is always up for sale or trade-in.
How Much To Rent A Tesla
Renting a Tesla can range from $65 to $120 per day. Additionally, the daily cost of some of the more opulent models might reach $400. Depending on how far you decide to drive, some rentals will also cost more. Make sure you have plenty of insurance coverage before renting a premium vehicle.
Do Teslas Hold Their Value
Fortunately, Teslas don’t lose value as quickly as other electric cars do, therefore the answer to the question is yes.
How To Get A Tesla For Cheap
The Model 3 with the highest mileage at the base trim level is the ideal place to start. The cheapest option is to purchase it directly from a private seller. However, you should avoid connecting with a seller through an online EV marketplace. Checking out Tesla’s CPO options directly through their website is also beneficial.
Can You Negotiate Tesla Price
Unfortunately, when buying a new car from Tesla, there are no possibilities for price negotiations. If you want to buy the car brand-new, you’ll have to pay the price established by Tesla. Of course, you could always go with a pre-owned Tesla.
